The increasing role of artificial intelligence (AI) technology as a core driver for manufacturing industry transformation has revealed that enterprises’ deficiencies in data resource integration and internal management constitute major obstacles to intelligent-driven upgrading. To address this issue, based on the resource orchestration theory, Chinese A-share listed manufacturing companies from 2007 to 2022 were conducted to investigate the impact and mechanism of AI technology on the transformation and upgrading of manufacturing enterprises. It is found that a significant positive correlation is identified between AI technology adoption and manufacturing enterprise transformation, which remained consistent through endogeneity and robustness tests. AI technology also can promote the transformation and upgrading of manufacturing enterprises through two independent mediating effects of enhancing the application level of data factors and improving the quality of internal control, as well as the chain mediating effect of the two. The impact of AI technology on the transformation and upgrading of manufacturing enterprises in non-state-owned, technology-oriented mergers and acquisitions, fast-changing technology-related industries, and high-tech industries is greater. These conclusions expand the mechanism of AI technology in the transformation and upgrading process of manufacturing enterprises and provide a theoretical basis and practical reference for enhancing their transformation and upgrading capabilities.